PERTH (miningweekly.com) – Metals miner KBL Mining on Friday said that it was undertaking a number of cost-cutting measures, including reducing staff, in light of recent market volatility.

The miner also announced that it was looking at selling equity stakes in its gold-producing Mineral Hill mine and its developing Sorby Hills project.

KBL told shareholders that since commissioning of the Mineral Hill mine, some 12 months ago, the project had failed to consistently meet production targets, owing to a combination of poor recoveries from the Parker's Hill ore, below-estimated mine ore grades, and decline development delays.

Production at Mineral Hill was set to increase in the near future as Red Terror ore was brought into the mix, but KBL noted that the project’s inconsistent performance to date had an adverse impact on the company’s working capital position.

In the meantime, KBL was also developing stage one of the Sorby Hills, which required a capital investment of some A$70-million to deliver some 20 000 t/y of lead and 800 000 oz/y of silver.

Starting in March, KBL implemented a cost reduction programme across its operations, restructuring the shift work at the Mineral Hill mine and reducing its overall workforce from 155 to 65, at the end of July.

Executive management have also agreed to a 20% pay cut, with chairperson Jim Wall moving to a nonexecutive role and nonexecutive director John Richards retiring from the board.

On an annualised basis, the director’s remuneration would now be some 30% of the 2012 financial year’s remuneration.

KBL had furthermore elected not to proceed with an earn-in on the Manbarrum tenements, which adjoin the Sorby Hills project

KBL noted, however, that despite the company’s cutbacks, it was still beyond its financial capacity to meet the full capital requirements for both the Mineral Hill and Sorby Hill projects.

As a consequence, KBL was actively considering the sale of a minority interest in the Sorby Hills project, in which the company holds a 75% stake, and the part, or total, sale of the Mineral Hill project.

KBL said that the anticipated improved performance at Mineral Hill over the coming months should ensure that this process was undertaken from a sound base.

In the event of a full or partial sale of Mineral Hill, KBL would look to repay the two-year term loan recently provided by Capri Trading, and could look to buy back some of its convertible notes.